Close to Fair Value at HEICO

Maintenance, repair and overhaul (MRO) of commercial equipment is at a heightened level at HEICO Corp. (HEI - Snapshot Report) because of increased usage, which engenders a vibrant after-market. In addition, rising fuel costs are forcing the airlines to find ways to cut other expenses. Both of these drivers offer significant opportunities for HEICO to expand and flourish.

However, while robust levels of revenues and income are envisioned for HEI over the balance of the decade, we believe that HEI is close to fairly-valued at current levels and therefore have maintained our HOLD opinion. The company's gross profit margin increased to 36.3% for the second quarter of fiscal 2008 as compared to 36.0% for the second quarter of fiscal 2007, reflecting higher gross profit margins within the ETG [Electronic Technologies Group] offset by slightly lower gross profit margins within the FSG [Flight Support Group].

Based on current market conditions, HEI is targeting fiscal 2008 net sales and operating income growth over fiscal 2007 to approximate 13% and 21%, respectively, and diluted net income per share within a range of $1.75 to $1.78. These targets exclude the impact of additional acquisitions, if any.

Read the full analyst report on HEI